Investors are increasingly using credit default swaps (CDS) to hedge against potential debt defaults by major technology companies. According to Morgan Stanley Research, weekly trading volume for CDS linked to firms like Oracle, SpaceX, Alphabet, Amazon, Meta, Broadcom, and Nvidia exceeded $9 billion in September, up from less than $2 billion in July.
The surge in hedging activity follows a significant increase in AI-related debt issuance, which reached an estimated $466 billion in 2026, compared to $101 billion during the same period in 2025. Rising inflation and interest rate expectations have intensified concerns regarding the ability of these companies to service their growing debt loads.
CoreWeave, which holds nearly $50 billion in debt, shows the most significant shift in risk perception. Its five-year CDS spread surpassed 1,100 basis points in mid-October, implying a default probability of 63–64%, up from approximately 30% a year ago. Other major tech firms, including Oracle, have also seen their CDS spreads reach record highs.
Market data indicates a tiered risk assessment by investors. While CoreWeave is viewed as high-risk, Oracle occupies a middle position, and large-cap tech companies remain at the lower end of the risk spectrum, despite a general upward trend in spreads. Some of this trading volume may represent institutional efforts to protect existing bond exposure.
